Preparing for growth: What can we learn from global high growth advisory firms?

Financial Advisory

Emily Landless

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The Advisor Benchmark study aims to understand global best practices in financial advice around the world, to help firms deliver better services and outcomes for clients. Leveraging data from the 2018 Benchmark study of over 1,300 advisory firms, this session discussed findings that relate to the characteristics of higher growth firms, relative to their lower growth peers.


  1. Global advisers assets under advice have grown on average by 17.%% annually over the past four years half of which is due to market growth
  2. The firms with the highest growth rate of assets grow revenues much faster but have a lower profit margin (25%) than those growing at the average annual growth rate (28%)
  3. Advisory firms which grow fastest have stronger organisational structure and plans around development, staff planning and compensation policies
  4. External sales coaching is the least effective form of adviser training
  5. Firms with higher growth have or are contemplating having more individual owners than those with average or lower growth
  6. Higher growth firms are less dependent on referrals (36%) than lower growth firms (73%) for new clients

Key issues and challenges:

  • Advisory firms need to prioritise - they cannot do everything and decisions need to be taken as to which is more important in any 2-3 year period as between: driving short term profit; generating cash flow; investing in more staff and technology; buying other businesses; selling the business.
  • M&A is a serious management distraction and is likely to hamper in year growth and profitability
  • Client and staff satisfaction, wellbeing and happiness may be as important as profit metrics for growing firms, should this be measured more frequently?
  • FCA has been helpful at encouraging firms to improve their organisational structure, stat training and development not just focusing in profit and sale growth
  • Firms may consider John Lewis partnership type schemes to attract and retain talent and create a sense of excitement and motivation through equity ownership
  • Succession planning is needed especially in small businesses, funding for younger staff to buy out founders may be needed
  • It is very import that the buyer is the right home for the staff and clients
  • Marketing and technology can help generate growth and service clients who have less to invest
  • The noise may be around attracting millennials and this is important but clients over 60 can be very lucrative for many years to come and are worth focusing on

Conclusions and solutions:

  • Need profit and cash flow to generate growth
  • Remember business leaders cannot do everything so need to prioritise
  • Having high quality staff is key and need to attract new ones and keep them incentivised and loyal may require letting them share in the ownership of the business
  • Seek ways of attracting new clients beyond traditional referrals if you want to achieve high growth
  • Consider culture and happiness as well as revenue growth and profit margin when buying and selling businesses

Expert: Martyn Chappell & Steven Greenfield - Dimensional Fund Advisors

Facilitator: Richard Clarke - Independent Consultant